Extension of Bush Tax Cuts
- Long term capital gains and qualified dividend rates (15%) extended through December 31, 2012
- Lower individual income tax rates extended through December 31, 2012
- AMT Exemption "patch" extended through December 31, 2012
- The child tax credit will double from $500 to $1,000 per child
Estate Tax Relief
The new law brings back the estate tax through December 31, 2012.
- The top estate tax rate will be 35%
- For 2011, the lifetime exemption amount will be $5 million per individual (indexed for inflation after 2011)
- Heirs will, again, be allowed to inherit assets with a “stepped-up basis”
Incentives for Businesses to Invest in Machinery and Equipment
- 100% bonus depreciation write-off for the cost of property placed-in-service from September 9, 2010 through December 31, 2011
- 50% bonus depreciation write-off for the cost of property placed-in-service from January 1, 2012 through December 31, 2012
- Beginning January 1, 2012, the maximum Section 179 depreciation limit will be $125k.
Temporary Employee/Self-Employed Payroll Tax Cut for 2011
For the 2011 tax year, the 2010 Tax Reform Act gives a two percentage point payroll/self-employment tax holiday for employees and self-employeds. As a result, employees will pay only 4.2% Social Security tax on wages and self-employment individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to the maximum threshold of $106,800.
Expired Business Tax Breaks Retroactively Reinstated and Extended Through 2011
- Research & Development tax credit
- New markets tax credit
- 15-year write-off for qualifying leasehold improvements, restaurant buildings and improvements, and retail improvements
- Special expensing rules for certain film and television products
- Empowerment zone tax credit
- Work opportunity tax credit
Expired Individual Tax Breaks Retroactively Reinstated and Extended Through 2011
- $250 above-the-line deduction for certain expenses of elementary and secondary school teachers
- Election to take an itemized deduction for State and local general sales taxes
- Above-the-line deduction for qualified tuition and related expenses
- Treatment of mortgage insurance premiums as deductible qualified residence interest
- Exclusion of 100% of gain on certain small business stock
- Energy efficient appliance tax credit
- Energy-efficient improvements to existing homes tax credit
- For 2011, the lifetime exemption amount will be $5 million per individual (indexed for inflation after 2011)
- Heirs will, again, be allowed to inherit assets with a “stepped-up basis”
Incentives for Businesses to Invest in Machinery and Equipment
- 100% bonus depreciation write-off for the cost of property placed-in-service from September 9, 2010 through December 31, 2011
- 50% bonus depreciation write-off for the cost of property placed-in-service from January 1, 2012 through December 31, 2012
- Beginning January 1, 2012, the maximum Section 179 depreciation limit will be $125k.
Temporary Employee/Self-Employed Payroll Tax Cut for 2011
For the 2011 tax year, the 2010 Tax Reform Act gives a two percentage point payroll/self-employment tax holiday for employees and self-employeds. As a result, employees will pay only 4.2% Social Security tax on wages and self-employment individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to the maximum threshold of $106,800.
Expired Business Tax Breaks Retroactively Reinstated and Extended Through 2011
- Research & Development tax credit
- New markets tax credit
- 15-year write-off for qualifying leasehold improvements, restaurant buildings and improvements, and retail improvements
- Special expensing rules for certain film and television products
- Empowerment zone tax credit
- Work opportunity tax credit
Expired Individual Tax Breaks Retroactively Reinstated and Extended Through 2011
- $250 above-the-line deduction for certain expenses of elementary and secondary school teachers
- Election to take an itemized deduction for State and local general sales taxes
- Above-the-line deduction for qualified tuition and related expenses
- Treatment of mortgage insurance premiums as deductible qualified residence interest
- Exclusion of 100% of gain on certain small business stock
- Energy efficient appliance tax credit
- Energy-efficient improvements to existing homes tax credit
http://www.pmaadvisors.com/tax_planning.php
